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ENERGY CRISIS: Will Austria have enough gas for winter?

In recent months, there have been fears that Austria will not have enough gas for the winter season. The good news is that gas storage facilities are filling up, but by how much? Here's an update.

ENERGY CRISIS: Will Austria have enough gas for winter?
A worker operates equipment operated by GCA (Gas Connect Austria) and TAG (Trans Austria Gas pipelines) at one of the largest interconnection gas hubs in Europe at Baumgarten an der March, Lower Austria. (Photo by JOE KLAMAR / AFP)

Since Russia invaded Ukraine in February and the EU imposed sanctions on the Kremlin, there have been concerns in Austria about the domestic energy supply.

The biggest worry is that Austria will not have enough gas for the coming heating season, which could quickly become a crisis when coupled with skyrocketing energy prices.

On Tuesday (August 16th), the European Aggregated Gas Storage Inventory confirmed that Austria’s gas storage capacity is now 60 percent full. This is already a significant improvement from early April, when reserves were just over 10 percent full.

Austria’s goal is to reach 80 percent capacity by November 1st in order to have a safety reserve. 

READ ALSO: Where are energy prices going up (again) in Austria?

But the Wiener Zeitung reports that there are questions over where the gas has come from as Gazprom has reduced deliveries to Austria’s OMV (the partially-state owned energy company) by two thirds.

Where is the gas coming from?

Christoph Dolna-Gruber, an energy advisor at the Austrian Energy Agency, said the origin of the gas “is not explicitly known”.

For example, from October 2022 to September 2023, OMV has secured additional natural gas supplies of 40 TWh from Norway and the Netherlands, reports the Wiener Zeitung.

The Austrian Federal Government has also secured 20 TWh of gas from two tenders, of which 8.5 TWh has been confirmed by the Ministry of the Environment to be from non-Russian sources.

However, the gas storage operators do not publish data on customers and contractual partners, so the origin is not in the public domain.

The extra 20 TWh of gas will be owned by the state but it is still unclear how it will be “handled” (e.g. for domestic use or for redistribution outside of Austria).

FOR MEMBERS: Why (and when) double-digit inflation is set to hit Austria

How much gas can Austria store?

The capacity of Austria’s gas storage facilities is 95.5 terawatt hours (TWh) or 8.6 billion cubic metres. The gas is stored underground in depleted natural gas reservoirs at a depth of between 500 and 2,300 metres.

Austria’s gas storage facilities are located in Haidach, Aigelsbrunn, Auerbach (the facility is known as 7-Fields), Puchkirchen, Haag, Tallesbrunn and Schönkirchen. All of the facilities are in Salzburg or Lower Austria.

OMV manages 26 percent (25.3 TWh) of Austria’s natural gas storage volume and the rest is divided between RAG, Uniper Energy and Astora.

The Haidach storage facility was previously managed by Gazprom and Astora, but the agreement with Gazprom came to an end earlier this month after Gazprom stopped making deliveries.

Since August 1st, Haidach has been managed by Astora and RAG. 

READ ALSO: Vienna forced to dim street lighting and cancel some Christmas illuminations

How much does Austria rely on Russian gas?

Prior to the war, Austria relied on Russia for 80 percent of its total gas consumption. This has reduced in recent months but Austria is still heavily dependent on Russia for its gas supply.

And following Gazprom’s announcement on Tuesday that gas prices could rise by up to 60 percent in the coming months for European customers, Austrian residents should expect further increases to their gas bills this winter.

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ENERGY

How European countries are spending billions on easing energy crisis

European governments are announcing emergency measures on a near-weekly basis to protect households and businesses from the energy crisis stemming from Russia's war in Ukraine.

How European countries are spending billions on easing energy crisis

Hundreds of billions of euros and counting have been shelled out since Russia invaded its pro-EU neighbour in late February.

Governments have gone all out: from capping gas and electricity prices to rescuing struggling energy companies and providing direct aid to households to fill up their cars.

The public spending has continued, even though European Union countries had accumulated mountains of new debt to save their economies during the Covid pandemic in 2020.

But some leaders have taken pride at their use of the public purse to battle this new crisis, which has sent inflation soaring, raised the cost of living and sparked fears of recession.

After announcing €14billion in new measures last week, Italian Prime Minister Mario Draghi boasted the latest spending put Italy, “among the countries that have spent the most in Europe”.

The Bruegel institute, a Brussels-based think tank that is tracking energy crisis spending by EU governments, ranks Italy as the second-biggest spender in Europe, after Germany.

READ ALSO How EU countries aim to cut energy bills and avoid blackouts this winter

Rome has allocated €59.2billion since September 2021 to shield households and businesses from the rising energy prices, accounting for 3.3 percent of its gross domestic product.

Germany tops the list with €100.2billion, or 2.8 percent of its GDP, as the country was hit hard by its reliance on Russian gas supplies, which have dwindled in suspected retaliation over Western sanctions against Moscow for the war.

On Wednesday, Germany announced the nationalisation of troubled gas giant Uniper.

France, which shielded consumers from gas and electricity price rises early, ranks third with €53.6billion euros allocated so far, representing 2.2 percent of its GDP.

Spending to continue rising
EU countries have now put up €314billion so far since September 2021, according to Bruegel.

“This number is set to increase as energy prices remain elevated,” Simone Tagliapietra, a senior fellow at Bruegel, told AFP.

The energy bills of a typical European family could reach €500 per month early next year, compared to €160 in 2021, according to US investment bank Goldman Sachs.

The measures to help consumers have ranged from a special tax on excess profits in Italy, to the energy price freeze in France, and subsidies public transport in Germany.

But the spending follows a pandemic response that increased public debt, which in the first quarter accounted for 189 percent of Greece’s GDP, 153 percent in Italy, 127 percent in Portugal, 118 percent in Spain and 114 percent in France.

“Initially designed as a temporary response to what was supposed to be a temporary problem, these measures have ballooned and become structural,” Tagliapietra said.

“This is clearly not sustainable from a public finance perspective. It is important that governments make an effort to focus this action on the most vulnerable households and businesses as much as possible.”

Budget reform
The higher spending comes as borrowing costs are rising. The European Central Bank hiked its rate for the first time in more than a decade in July to combat runaway inflation, which has been fuelled by soaring energy prices.

The yield on 10-year French sovereign bonds reached an eight-year high of 2.5 percent on Tuesday, while Germany now pays 1.8 percent interest after boasting a negative rate at the start of the year.

The rate charged to Italy has quadrupled from one percent earlier this year to four percent now, reviving the spectre of the debt crisis that threatened the eurozone a decade ago.

“It is critical to avoid debt crises that could have large destabilising effects and put the EU itself at risk,” the International Monetary Fund warned in a recent blog calling for reforms to budget rules.

The EU has suspended until 2023 rules that limit the public deficit of countries to three percent of GDP and debt to 60 percent.

The European Commission plans to present next month proposals to reform the 27-nation bloc’s budget rules, which have been shattered by the crises.

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